Tokenised deposits and wholesale CBDC

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The settlement asset for tokenised securities has been the open question of the programme. A tokenised bond that settles against a conventional bank transfer loses the benefit of atomic settlement. Three candidates have been tested: tokenised bank deposits, single-currency stablecoins and wholesale central bank digital currency.

Tokenised deposits are the banks' preferred answer. They remain deposits under the Banking Act 1970, are deposit-insured and sit on the bank's balance sheet, so they require no new regulation. Their limitation is reach: a tokenised deposit of DBS can be used only by DBS customers or within a network of banks that have agreed to accept each other's tokenised liabilities. Project Guardian pilots used tokenised deposits for the first trades and the banks have continued to develop them for intra-bank and inter-bank settlement.

Single-currency stablecoins, discussed in Chapter VI, are the non-bank answer. XSGD has been used as a settlement asset in pilots and has the advantage of circulating on public blockchains. Its limitation is that it is a claim against a payment institution and is not deposit-insured, which makes some institutional participants reluctant to hold large balances.

Wholesale CBDC is the central bank's answer. MAS announced in November 2023 that it would pilot the live issuance of wholesale CBDC for interbank settlement in 2024. The SGD Testnet announced in November 2024 provides the environment in which participating banks settle tokenised transactions in central bank money.¹ MAS has repeatedly stated that it sees no case for a retail CBDC in Singapore. Project Orchid, which ran from 2021, explored purpose-bound money, meaning digital money that carries programmable conditions on its use, with pilots for government vouchers and commercial payments, and concluded that the concept could be delivered with tokenised deposits and e-money without a retail CBDC.²

Notes

MAS, announcements concerning the pilot issuance of wholesale central bank digital currency for interbank settlement (November 2023) and the SGD Testnet (November 2024). ↩
MAS, Project Orchid reports (2022 and 2023) on purpose-bound money and the conclusions on retail CBDC. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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I am Of Counsel with KGP Legal LLC in Singapore, where I work with a global client base of successful entrepreneurs and their families, independent asset managers, commodity trading houses and other commercial clients. I am a German and Swiss attorney-at-law, also admitted as a solicitor in England & Wales and in Hong Kong. I divide my time between Zug in Switzerland, Singapore and Hong Kong. Since 2017 I have advised international clients on more than 700 crypto and digital asset projects. I also have extensive experience in cross-border litigation and arbitration in Singapore, Hong Kong and other markets in South-East Asia and Greater China.

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